|
|
 |
|
 |
| CHOCOLATE & CONFECTIONARY |
|---|
| Facts and Figures |
| · In 1847 Joseph Fry made the first chocolate bar.
· 151 years on, the chocolate and confectionery market is now worth £5.45billion and is expected to grow to an estimated £6.7 billion by 2003, making it larger than the combined bread, tea, breakfast cereal, biscuit and pet food markets.
· The British love chocolate, consuming more than any other country in the world at the rate of £174 per second.
Makeup of expenditure
The chocolate and confectionery market is split into 2 main sectors, as follows:
· Chocolate confectionery accounted for 68.4% of sales. It has grown 22% over the last five years and is now worth £3.7 billion.
· Sugar confectionery accounted for 31.6% sales. This represents an increase of 28% since 1993 and is now worth £1.7billion.
Product breakdown
Chocolate confectionery:
· Courtliness - Twix, Kit-Kat, Bounty, Mars bar, Snickers. Retail sales value: £1.38bn, in 1998.
· Boxed - Celebrations, Roses, Quality Streets. Retail sales value: £690m, in 1998.
· Bite-size - Maltesers, Smarties, Minstrels. Retail sales value: £420m, in 1998.
· Blocks/Moulded - Dairy Milk, Caramel, Galaxy. Retails sales value: £580m, in 1998.
· Other (incl. Seasonal i.e. Easter, Christmas) - Easter Eggs, Novelty packs. Retails sales value: £655m, in 1998.
Sugar Confectionery:
· Fruit sweets - Fruit Pastilles, Wine Gums, Starburst. Retails sales value: £636m, in 1998.
· Mints - Polo, Extra Strong Mints, Foxes Glacier Mints. Retails sales value: £344m, in 1998.
· Chewing Gum - Orbit, Extra, Airwaves. Retails sales value: £292m, in 1998.
· Traditional Sweets - Comprises of boiled sweets, toffees, fudges, many of which were originally sold loose. Retails sales value: £172m, in 1998.
· Medicated Confectionery - Tunes, Lockets, Soothers. Retails sales value: £120m, in 1998.
Issues
Distribution
· Multiple grocers are the dominant distributors taking a 28% share of the market. Their rise to dominance has largely been at the expense of independent retailers, who do not have the buying influence over manufacturers that the multiple grocers have. The remaining distribution outlets are comprised of Petrol forecourts, CTN’s, off licenses etc.
Health and Dental Hygiene
· Over the past few years there has been a lot of publicity about consumers poor eating habits. Confectionery has been caught up in this negative publicity both explicitly and implicitly but despite this and the fact that there are plenty of other snack foods such as cereal bars and yoghurts, which are perceived as a healthier alternative, the confectionery market has continued to grow. One reason for the continued growth is the response from manufacturers who have introduced a whole range of initiatives some of which are set out below;
- Chewing gum has emerged as a strong growth sector following the recent claims that it benefits oral hygiene. The British Dental Association and the World Dental Federation have partnered with Wrigley’s to promote this concept.
- Mints have also benefited from the claim that they encourage fresh breath and therefore are implicitly healthy. This is particularly prevalent in the 24-35-age group who are not attracted to chewing gum and are viewed as a future growth market.
- A whole raft of low fat products has been introduced into the market place such as Mars Flyte.
Stagnated
· The market is very stagnant with many of the top 20 products having been in existence for many years e.g. Kit-Kat has been the number one selling chocolate bar for the past thirteen years. This brand dominance perpetuates the stagnation since new products find it almost impossible to gain market share when they have to compete against such well-established brands.
European Union Chocolate Directive
· Under the current European directive, chocolate must contain 25% cocoa butter to call itself “milk chocolate”. English chocolate is made with 20% cocoa butter, which falls below the European standard and therefore means that English chocolate abroad can not be marketed and sold as Milk chocolate. It is feared that this may have a detrimental effect on chocolate exports because people on the continent may perceive the English product as sub-standard or inferior.
Production
· Chocolate confectionery is biased towards three main manufacturers; Cadbury, Nestle and Mars who between them control 74% of the market. The dominance of the big three can be explained by the high costs of production and marketing involved in launching a new product. It is estimated that the costs of launching a new chocolate in mainland Britain are £100m.
· The sugar confectionery market is more open due to the lower set-up and production costs, which allow smaller companies to operate. Consequently no one company dominates as indicated by the market shares; Trebor Basset has the largest share at 22% with Wrigley’s in 2nd place at 12%. The balance is divided amongst smaller manufacturers.
Cocoa Supply
· The largest producer of cocoa in the world, the Ivory Coast, is having trouble meeting demand. Consequently chocolate manufacturers are seeking new supplies to ensure their growth is not affected.
Trends
Impulse Buying
· Confectionery is increasingly being positioned as a convenient, eat anywhere product which is well suited to garage forecourts, CTN’s and off licences. This trend is set to continue as manufacturers increasingly pre price products on the wrapper to encourage impulse buying.
<
Lifestyle
· Change in the consumer’s lifestyles will benefit the confectionery market. The increase numbers of working women and the decline of set family meals encourages snacking and eating ‘on the hoof’. Confectionery is perceived as a convenient and versatile product that can be eaten anywhere, often as a meal substitute.
New Product Development
· The large costs of bringing a new chocolate confectionery to the market continue to stifle new product development. Instead manufacturers are relying on stretching existing strong brands such as the orange Kit Kat which also has the added benefit of promoting the existing brand.
Low fat products
· An increasing number of middle aged consumers are on diets which means the consumption of low fat products are set to increase. In an attempt to prevent them from leaving the confectionery market, manufacturers are introducing sugar-free sweets and low fat chocolate bars i.e. Snickers light, which is under trial.
|
|
|
|
